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The LNS/York/Hale/Microsoft Smoking Gun: More - Updated: Mr. Morris of Lovells
Friday, July 24 2009 @ 03:10 PM EDT

Both HaleGlobal and York Capital Management must be reading Groklaw. Joke. Joke. As in, is there a difference?

Anyway, right after Groklaw pointed out two days ago that Microsoft Licensing was transferring its claim against SCO in the bankruptcy to an entity called LNS, and that LNS seems to point to HaleGlobal/York Capital, the phone number on one of the links we provided has been changed.

Silly wabbits. You can't cleanse the Internet. This jig is up, m'hearties. Naturally, we took the precaution of saving snapshots, which I will now show you, along with some more interesting tidbits, like the same building address for LNS and Charles Hale, Managing Director at York Capital.

First, notice the address on the filing [PDF] regarding Microsoft transferring its claim to LNS, captured in this screenshot:

We don't see the purchase price filled in, by the way. Now go to any whois and search for haleglobal.com and this is what you will find:

What a coincidence. Are these guys not a riot? I have edited out the apartment number for Mr. Hale, as a courtesy, but I'll mention that they are not identical. But that could be either a mistake on one of these documents, or they are nearby, down the hall, or whatever. But the address otherwise is identical.

Now, on the disappearing stuff. We had pointed to this HaleGlobal contact page, which then had phone and email contact info for Charles Hale. If you go there today, the phone number has changed to a 917 area code number. But here's how it looked on Wednesday, and if you check Google and go to cache, you will find it's been that way since the last Google scrape in May:

If you recall, we had linked to this contact information for York Capital on LinkedIn, which shows York Capital's phone as 212-300-1300. Remarkably similar to Mr. Hale's, which is what started us on our little research project.

Here's the link to JGD Management's Executive page on BusinessWeek, showing Mr. Hale as Managing Director at York Capital Management with the phone number 212-300-1300. Here's some more on York Capital's phone number:

  • You can see it on this blog where York Capital is listed on the Committee of Unsecured Creditors [PDF] in the Bearing Point bankruptcy.

  • You can find it in this SEC filing, which shows the phone and address for York Enhanced Strategies as 212-300-1301 and fax at 1300, 767 Fifth Ave, NYC. But I think they have it transposed, judging from the next entry.

  • You can find it on a BusinessWeek page for private company JGD Management, which lists York Capital at that same 767 Fifth address and has the phones the other way around. JDG is the legal name, and York Capital Management is the d/b/a: "JGD Management Corp. doing business as York Capital Management is an employee owned hedge fund sponsor." The key executives listed there are:
    Mr. James Gerard Dinan
    Chief Executive Officer and Member of Senior Management Committee

    Mr. Jeffrey Andrew Weber
    President and Member of Senior Management Committee

    Mr. Adam Jay Semler
    Chief Financial Officer and Member of Senior Management Committee

    Mr. Alan Henry Cohen
    Senior Managing Director and Member of Senior Management Committee

    Mr. William Charles Vrattos
    Senior Managing Director and Member of Senior Management Committee

  • You can find it on York Capital's letterhead [PDF].

Trying to cleanse the Internet is hard. Too many tubes.

And before you send me any Pulitzer Prizes, I'll tell you in all honesty that it wasn't even me that noticed the phone number similarity first. It was Groklaw as a group that noticed and collected this research. Open Source principles in action. It's a great model for journalism too.

And in case Microsoft reads Groklaw: Shame on you, Microsoft. Seriously. If you knew, shame, shame, shame.

Update: Here is the lawyer that represents LNS, Matthew P. Morris of Lovells LLP. His bio tells us this about his background, among other details:

Prior to joining Lovells, Matthew participated in the representation of the Official Committee of Unsecured Creditors in Enron Corp.’s Chapter 11 case and has been involved in numerous other large-scale bankruptcy cases.
A bit more from Legalspan:
Matthew P. Morris is a Partner in the Business Restructuring and Insolvency practice at Lovells LLP, resident in the New York Office. Matthew concentrates on creditor-side representations in corporate bankruptcy and other business disputes. He has extensive experience in all aspects of complex commercial bankruptcy and commercial litigation and represents and advises bank, financial services, fund, reinsurance, corporate and other clients in a variety of US bankruptcy and cross-border insolvency disputes and proceedings. Prior to joining Lovells, Matthew participated in the representation of the Official Committee of Unsecured Creditors in Enron Corp.'s Chapter 11 case and has been involved in numerous other large-scale bankruptcy cases. Some of his recent works includes advising official liquidators of collapsed Cayman-based hedge funds in various US litigation and Chapter 15 procedings [sic]; representing the BVI and Hong Kong court-appointed receivers of BVI-registered entities in connection with US litigation issues in s global dispute between French and Chinese food and beverage concerns; representing an insolvent Brazilian enterprise in defense of US preference actions; and advising multiple domestic and foreign banks and funds in connection with the Lehman Bros. bankruptcy and resulting derivative contract and trade termination issues. Mattew [sic] received his J.D from Columbia University Law School and his B.A from Middlebury College.
He represented [PDF] Centerbridge Credit Partners LP and Centerbridge Credit Partners Master LP in the Lehman matter. Last year, he lectured in a CLE course on hot topics in bankruptcy [PDF] on "Recognition of Foreign Proceedings and the 'Center of Main Interest' Presumption Under Chapter 15 of the Bankruptcy Code." So he's a bankruptcy guru. I don't know yet all that the rest of that means, the subject of his lecture, I think by "foreign", they mean Cayman Islands-style of foreign, though. Doesn't SCO have Cayman Island based investors still? But one thing I do know. Whoever York represents cares enough to send the very best from behind its dark screen.

CLE means you get credits if you sit through the course. Lawyers have to do that to keep up, because the law is always changing. And here's a clue as to what the subject matter of his course is about, from the law firm Holland & Knight:

Main and Nonmain Proceedings

Under Chapter 15, the foreign proceeding can be recognized as a foreign main or a foreign nonmain proceeding. Thus, at the beginning of the case, the representative(s) of the foreign debtor must seek the appropriate recognition.

The difference between main and nonmain is important.

A foreign main proceeding is a proceeding pending in the country where the debtor has the “center of its main interests.” Recognition as a foreign main proceeding applies certain provisions of the Bankruptcy Code to the Chapter 15 proceeding, including the automatic stay, which prevents any party from initiating or continuing any action against the debtor or its estate, including a Rule B attachment action. Any existing attachment action (whether in a U.S. District Court or any other court) against the debtor will be stayed by the recognition by the U.S. Bankruptcy Court of the foreign main proceeding.

A foreign nonmain proceeding is a proceeding pending in a country where the debtor has an “establishment,” but which is not the debtor’s “center of main interest.” Following the recognition of a foreign nonmain proceeding, the Bankruptcy Court may grant appropriate relief only on the further application of the foreign representative, including staying the commencement or continuation of any individual action or proceeding.

Effect of Recognition

Under Chapter 15, upon recognition of a main or nonmain foreign proceeding, the U.S. Bankruptcy Court, at the foreign representative’s request, may entrust the distribution of the debtor’s U.S. assets to the foreign representative.11 Importantly, the Bankruptcy Court may order turn over to the foreign representative only “if the interests of the creditors and other interested entities, including the debtor, are sufficiently protected.” Although this condition was not present under the predecessor to Chapter 15,13 courts frequently considered the rights and protection of U.S. creditors in considering whether to permit the transfer of funds and other assets back to the jurisdiction of the debtor’s main proceeding. Thus, if at the time of the Chapter 15 filing assets of the debtor have been attached in the U.S., the foreign representative could request that the action be transferred to the U.S. Bankruptcy Court for that court to hear the motion to vacate the attachment, and could request that upon recognition of the foreign proceeding, the assets be turned over to the foreign representative.

You can visit the site to read the rest, including the footnotes, which I removed. So. LNS sends in a guy who teaches about Chapter 15 bankruptcy. Here's what that is:
Chapter 15 is a new chapter added to the Bankruptcy Code by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. It is the U.S. domestic adoption of the Model Law on Cross-Border Insolvency promulgated by the United Nations Commission on International Trade Law ("UNCITRAL") in 1997, and it replaces section 304 of the Bankruptcy Code. Because of the UNCITRAL source for chapter 15, the U.S. interpretation must be coordinated with the interpretation given by other countries that have adopted it as internal law to promote a uniform and coordinated legal regime for cross-border insolvency cases.

The purpose of Chapter 15, and the Model Law on which it is based, is to provide effective mechanisms for dealing with insolvency cases involving debtors, assets, claimants and other parties in interest involving more than one country....

An ancillary case is commenced under chapter 15 by a "foreign representative" filing a petition for recognition of a "foreign proceeding." (1) 11 U.S.C. § 1504. Chapter 15 gives the foreign representative the right of direct access to U.S. courts for this purpose. 11 U.S.C. § 1509. The petition must be accompanied by documents showing the existence of the foreign proceeding and the appointment and authority of the foreign representative. 11 U.S.C. § 1515. After notice and a hearing, the court is authorized to issue an order recognizing the foreign proceeding as either a "foreign main proceeding" (a proceeding pending in a country where the debtor's center of main interests are located) or a "foreign non-main proceeding" (a proceeding pending in a country where the debtor has an establishment, (2) but not its center of main interests). 11 U.S.C. § 1517. Immediately upon the recognition of a foreign main proceeding, the automatic stay and selected other provisions of the Bankruptcy Code take effect within the United States. 11 U.S.C. § 1520. The foreign representative is also authorized to operate the debtor's business in the ordinary course. Id. The U.S. court is authorized to issue preliminary relief as soon as the petition for recognition is filed. 11 U.S.C. § 1519.

Through the recognition process, chapter 15 operates as the principal door of a foreign representative to the federal and state courts of the United States. 11 U.S.C. § 1509. Once recognized, a foreign representative may seek additional relief from the bankruptcy court or from other state and federal courts and is authorized to bring a full (as opposed to ancillary) bankruptcy case. 11 U.S.C. §§ 1509, 1511. In addition, the representative is authorized to participate as a party in interest in a pending U.S. insolvency case and to intervene in any other U.S. case where the debtor is a party. 11 U.S.C. §§ 1512, 1524.

Let me fantasize, because I know nothing about Chapter 15, so that is all I can do, but from what I've just read here is my nightmare scenario: SCO Germany or Japan or China -- did we ever find out what happened to SCO China? -- or whatever files for bankruptcy in their respective country. They then ask that the foreign bankruptcy court stay all further action or even take over the bankruptcy going on in the US? Then they intervene in SCO v. IBM etc.?

OMG. Like SCO wouldn't try that. Again, I stress I know nothing about Chapter 15, so don't go by me, but the very description of Chapter 15 is appalling in a SCO context.

Oh, well. LNS may have a guy who teaches Chapter 15 bankruptcy, but Cravath probably has in its stable of attorneys one of the guys who wrote it. And it may even be too late now to even try my nightmare scenario after all the cats hopped out of the bag. But wouldn't that explain the LNS transfer?


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